User talk:Saifur Rahman Khokon

Rajan Mathrani
Rajan Harbhagwandas Mathrani was born on May 25, 1948, in New Delhi to Harbhagwandas Pribhdas and Kamla Mathrani. His family’s origin lies in the Sindh province of undivided British India.

His father Harbhagwandas Pribhdas Mathrani, was an accomplished engineer and had received Knighthood – the Order of British Empire (OBE) – for designing and executing a number or barrages across Pakistan to save the country’s Indus river basin and adjacent areas from flooding, especially the Sukkur Barrage and Guddu Barrage on the Indus.

The Sukkur Barrage was built in 1932 and is about 1 mile (1.6 kilometres) long. It crosses the Indus River three miles (4.8 kilometres) below Sukkur Gorge and feeds irrigation canals.

The project has greatly increased the cultivation of rice, but cotton also has become a major crop on the left bank of the river and has replaced rice as a cash crop. The canals originating from it serve a cultivable area of about 5 million acres (2 million hectares) of land producing food grains, wheat and cotton. Due to his father’s status as a senior civil engineer and a Knight of the British Empire, the family had a very prestigious position, with his parents mingling both with senior British officials as well as the Indian Civil Service (ICS) officials.

So, Rajan Mathrani was sent to some of the best educational institutes, both in India and the United Kingdom. He started schooling in St Columbus School in Delhi. With the withdrawal of the British in 1947 and the creation of India and Pakistan, his family had to migrate to India, although Rajan’s parents were already living in Delhi for years. Later, they had to abandon their properties in Sindh Province, which became part of Pakistan.

After schooling, Rajan was admitted at St Mary’s in Bombay – now Mumbai. Due to family pressure, and to keep his father’s engineering legacy in the family, Rajan was admitted to Sheffield University, UK, to study Mechanical Engineering. Although engineering was not his cup of tea, he had to live with it for a while. In South Asia then parents decided what their children would study and whom they would marry.

But the young Rajan had other ideas in life. For that, he had to swallow some bitter pills – including the study of engineering in England. But it did offer a degree of freedom from strict family guidance. A young graduate, Mathrani began his career in the consumer durables industry in Japan in 1968. “One of my cousins used to run an export-import and trading business in Japan,” Mathrani recalls. “Although my education was in the engineering line, I found solace in trading and worked for my cousin’s company for nearly 20 years.”

While in Japan, he started thinking Japanese and got used to Japanese culture and lifestyle.

“I learned a lot about the Japanese way of life, business and society,” he says. “I learned how to do business in that country and how to manage people. “In Japan, to do business is business and not to do business is also business – as long as one keeps trying. Japanese people are very hard working.

“Japanese people believe in real teamwork. Everything in Japan is the result of teamwork. Ethical and responsible business practice is a way of their life. They take pride in whatever they do, so they take ownership of their work. Even a taxi driver would serve a passenger with utmost sincerity and pride.”

Naturally, the young Rajan Mathrani, who started liking the Japanese way of life, fell in love with a Japanese beauty: Yuriko. The two were married in 1972. The couple has two daughters. Yuriko, who is the company’s chief financial officer, is an active partner in the business. While Rajan runs the business, Yuriko makes sure the numbers are right and the company grows.

While working in Japan, the couple saw the price gap in the consumer electronics market. So, Mathrani invested part of his savings to launch his business under the name of Elekta in 1988. “Initially, we started to sell branded electronic items, such as Sony and Toshiba, to customers,” he recalls.

The original team consisted of five employees; currently the team is around 550. “In those days, major electronics giants started taking a direct role in retail business to squeeze the margins. It was becoming difficult to survive. While demand was growing in East Europe, we could not supply to them with the right price,” he says.

“However, since I was in import-export trading in my cousin’s company, I had some good contacts in key markets and then started to export to those markets as well. This is when I felt that there is a widening gap in the prices of electronics that we could fill.

“So, we explored the manufacturing of brand new electronics products at a manufacturing plant in Korea and developed the prototype designs and agreed on the price. We found that we could supply the same quality products at 40 per cent lower price – and many buyers were ready to take the goods. So we placed an order, which was soon sold out. These carried our new logo – Elekta – and then we sold out the second consignment. This is how the brand took off as a small player in the consumer electronics business.

“Initially, it used to be shipped to East Europe via Berlin. The shipping route was very complex and it used to take a long time to reach the destination. However, we found our way around. Since 1990, most of the products have been routed through Dubai which gradually became our biggest re-export hub.”

Future Plans As businesses grew in the early 1990s due to the strong demand driven by Russia, East Europe and Central Asian countries, Mathrani felt he should relocate his base to Dubai – the major trade entry spot to these key markets. So, in 1994, he moved his company headquarters to Dubai to better position the company close to the emerging markets.

About 60 per cent of his company’s revenues come from the household appliances segment while the rest 40 per cent comes from electronics.Mathrani says that he might spin off majority shares of the company to the public or private participation – either through an initial public offering (IPO) or private placement to fund the company’s growth in future.

“We are still a family owned company – 100 per cent shares belong to the family,” Mathrani says. “However, we also want to grow fast and become a global brand. For that, we need funds to fuel the growth and it could come through offloading shares to others – private or public participation.

“We are currently entering the Indian market, both for sale and marketing of our products, as well as to establish retail and after-sale service centres across the country. However, we might consider setting up manufacturing plants within the country to serve the Indian market, if demand picks up.” The company has marketing offices in every GCC country and services the Asian market through a sales office in Bangkok and the Indian subcontinent through a sales office in Mumbai.

The office in Japan serves as the research and design centre, with the implementation coming through the offices in Guangzhou and Ningbo, China. Mathrani is currently focusing on tablet PC products. He has launched four models with prices ranging from Dh299 to Dh750 a piece. “It started off very well and I hope it will catch up soon,” he says.

Mathrani, who works nearly 11 hours every day, starting at 9.30am, feels there is no substitute for hard work. “I have lunch at office and continue working till late almost every day,” he says. “There is no short cut to success.

“Our success in business also came due to far-sighted approach. We are in this for the long haul. We are not into a short-term game to earn some quick bucks. We are here to improve the lifestyle of our customers by constantly trying out new products that helps us to positively influence the lives of the consumers.”

Elekta
Elekta, that started in Osaka, Japan, as a husband-wife initiative in 1988, has developed into a life-long partnership between Rajan Harbhagwandas Mathrani, a Non-resident Indian entrepreneur, and Yuriko Mathrani, a Japanese professional.

This has culminated into a Dh1 billion global conglomerate producing 500 types of electronics and household appliances designed, manufactured and sourced from a handful of countries and then re-exported to 70 countries via the UAE in a complex global operation carried out through its corporate headquarters in Dubai.

The company, that employs 550 people, uses a globalised and liberalised international business environment to conduct its business across the world. It registered its brand in Japan, outsources products from China, Turkey and other countries, controls it from its global headquarters in Dubai and then re-exports to 70 growing economies. If this is not globalisation, than what is it?

Mathrani hails from India, studied in the United Kingdom, lived in Japan and now in Dubai. A global citizen – he’s truly been there, done that! While working in electronics distribution in Osaka, Japan, he saw a gap in the market – and an opportunity. This prompted him to launch Elekta, a consumer electronics and household appliances brand. He first registered the company in Japan and then spread it throughout the world under the brand Elekta. In less than a quarter of a century, Elekta has become a household name in the Gulf. His home appliances are very popular among South Asian expatriates, many of whom will carry an Elekta product while going home on vacation.

“Since the launch of Elekta in 1988, we have manufactured and sold millions of pieces of electronics and household appliances across the world,” Rajan Mathrani, Managing Director of Elekta Gulf, says.

“We launched Elekta in 1988 when we saw a gap in the market left by the recognised global brands. For many middle-class households in emerging markets, branded international electronics and household appliances were deemed expensive, they could not afford. In order to fill in this vacuum, we approached some of the manufacturing plants who were ready to manufacture same quality goods at a much cheaper price in Elekta.”

He has been featured among the 100 most successful Non-resident Indian (NRI) businessmen in the Gulf by Forbes Arabia, Arabian Business and a number of other publications.

In 2009, the company sold 1.8 million units of home appliances and consumer electronics, up from 1.4 million in 2008. During the last 25 years, his company would have manufactured and sold more than 20 million units – even at a conservative estimate. “I really do not count the units in that great detail. But for a good number of years, our annual production and sales have averaged over a million units. Currently we sell about two million pieces per annum,” he says.

The OEM Advantage Since the later half of the 1980s, electronics and household appliance manufacturing business worldwide has turned into what is known as Original Equipment Manufacturing (OEM) – a system in which an original equipment manufacturer or a factory manufactures products or components that are purchased by another company and retailed under that purchasing company’s brand name.

OEM refers to the company that originally manufactured the product. So, technically, an investor could develop a brand name, design products and outsource manufacturing to these OEM factories to deliver the goods at an agreed price. The brand owner invests in brand building – advertisement, marketing and public relations to make it popular among its target consumers.

Usually, the owner of the brand engages with the OEM manufacturers after designing the products and assigns the manufacturing of the product. In many cases, the OEM partner also helps to design and develop the product for the brand owner – who retains ownership of the brand, the trade mark and logo.

The brand owner has to place order for a large quantity, though. The price per unit varies with the size of the order – the higher the quantity, the lower is the cost per unit. That’s why the most popular brands could afford to sell at a lower price – simply due to the sheer economies of scale. His company owns the brand, pays the OEM manufacturer for the production and delivery of the goods and sells it in the market at a higher price to benefit from the profit margin. This way, the company does not have to own a manufacturing plant to be able to produce the goods, as opposed to the likes of international brands such as Sony, Panasonic, Philips, Toshiba, Hitachi, Grundig, etc., who have to maintain their own manufacturing plants, pay salary of workers and other operational overheads, making costs higher and so reducing profitability. The crucial manufacturing part in this business is taken care of by the OEM manufacturer. The success of these OEM brands, however, largely depends on the marketing and sales strategy. Not all OEM brands are successful. Many such brands mushroomed and then died, not accepted by consumers.

Brand owners have to constantly engage with sales and distribution channel partners, reach out to consumers and create a good brand image in their minds – for them to be able to trust the brand. However, a lot of the brand’s success depends on the quality and durability of the product, as well as after-sales service standards.

“The reason why branded goods were expensive in those days was partly due to the limited market penetration and higher production costs and the excessive margins commanded by these brands,” Mathrani explains. “We found that if the price of these products could be lowered, then more and more people would buy and use them, provided we maintain quality and after-sales service. This way, the household appliances market would expand fast. So, we launched Elekta to fill the gap – there was a huge potential for business. “At the beginning, we used to manufacture Elekta products from manufacturing plants in South Korea and export to East European countries through the West-controlled part of Berlin and Austria. From here traders used to sell them to the East European markets.”

Due to the Soviet influence and state-controlled economy, entry to these markets used to be restricted, despite a strong demand. As a result, a black market thrived all over East Europe and parts of the then Soviet Union. The local traders would somehow manage to get these goods into those markets through Berlin or Vienna and other cities.

The East European market opened to international consumer goods in a much larger way after the collapse of the Berlin Wall in 1989, and the subsequent collapse of the Soviet Union in 1991. As a result, goods started to flood into these markets in large quantities.

“Since the changes in 1990, demand for our goods in East Europe had multiplied and we needed to accelerate the production of goods,” Mathrani recalls. “This is when I found a vacuum in the market – the OEM business. So, we started to engage with a number of manufacturing plants in China and other countries to increase the production of Elekta goods.”

Since the beginning of globalisation, most international electronics and household appliances brands started to outsource manufacturing to third-party factories and plants located in Singapore, Malaysia, Taiwan, China etc This has resulted in the development of a number of electronics factories in these countries and, in order to make them profitable, they were needed to run efficiently as a profit centre throughout the year.

The rising demand for consumer electronics drove the growth of electronics manufacturing plants – both in number and size – that increased the level of competition. As a result, factory owners then began to hunt for other brand owners to help manufacture their products, to keep the industry busy and profitable throughout the year. As a result, new brands evolved – as they found ready-made manufacturing plants are willing to produce and deliver their products at a cheaper price, due to the economies of scale achieved by them. Although Taiwan, Malaysia and Singapore were at the forefront of the OEM source markets initially, China gradually took the leadership in the OEM business due to the sheer size of its factories that provided better economies of scale, efficiency, capacity and speed.

Due to cheap labour and reduced price of raw materials, Chinese manufacturers helped prices of electronics to come down significantly. As a result, the growing middle classes in emerging markets and new cities in the growing economies of Asia, Africa, Middle East, East Europe, Latin America and Central Asia began to embrace these new brands as opposed to the relatively recognised global brands such as Sony, Panasonic, Phillips, Grundig, etc.

Since then, Mathrani, who at the time was based in Osaka, Japan, did not look back. However, due to the changes in the global economy that triggered a major shift from the West to the East, he had to look at repositioning his operational base closer to the customers. So, he chose the Middle East. But which was the best place to do business in the Middle East? Since the collapse of the Soviet Union, Dubai had become a major source of goods for the Russian, East European and Central Asian markets – all of which were under the control of the former Soviet Union till 1991. Traders from these countries flocked to Dubai in hundreds and started buying goods with dollars and airlifted them home to sell. Dubai became a hub for consumer goods for these markets.

So, Mathrani naturally chose to shift his headquarters to Dubai in 1994 – to be able to tap these buyers and to have his slice of business from the growing pie. “Dubai made me more Indian,” Mathrani says. “In Japan, I almost became Japanese. I still hold my Indian passport.” Today, he has made Dubai his home. His story is truly a fascinating one.